How the finance minister defended his Budget

In an interview to NDTV 24x7 on Monday, Mukherjee spoke his mind while dissecting the Budget. Edited excerpts:

The main worry a lot of people have is prices next year, oil prices in particular. If global prices go up, will you stick to your policy and be firm and not increase subsidy and allow prices to go up?

We would like to be in a position where we can make some sort of predictability on where it will settle.

Today, whatever we do, it will appear to be ad hoc-ism.

We may have to follow a particular course of action, we may have to follow a combination of different policies.

What is the subsidy level for oil you have assumed within your Budget numbers?

I have given some figures and I think it is Rs 23,000 crore (Rs 230 billion).

The 2011-12 figures did not include only the subsidies for 2011-12.

What was to be given in 2009-10 was rolled over to 2010-11.

. . .

In the Budget for the current year, the subsidy numbers proved inadequate to provide for so much more. Is there a similar risk for next year?

There are certain things over which you have no control and you have to bite the bullet when you reach that stage.
But I would not like to indulge in speculative assumption of the figures unless I know the quantum involved.

Is it possible your fiscal deficit might climb to five per cent?

Various options are open.

You can pass it on partly, you can absorb partly, the companies can absorb partly.

We don't have one straitjacketed formula but various options.

. . .

This inflation has been so bad, especially with food prices. Would you consider lowering the tax exemption from Rs 180,000 to Rs 200,000?

The answer lies in not tampering with the exemptions but in taking effective steps to bring down the inflationary pressure to acceptable levels.

In my speech, I have accepted that though food inflation has come down from 20.2 per cent in February 2010 to 9.3 per cent in January 2011, it is still not acceptable.

There is no question of increase in the exemptions?

At this stage, if we want to have the Direct Taxes Code.

. . .

Is there something you can do to speed the pace of the reforms being rolled out?

I am doing that.

Somebody has criticised that my Budget has no headline items or no big-ticket items but I believe reforms are a continuing process.

I am not talking about headlines, I am talking about deadlines.

I am coming to that.

You've raised three questions.

I talked about DTC last year and mentioned that it will be operational only on April 1, 2012.

As far as goods and services tax is concerned, it doesn't depend on me alone.

The same story is with legislation.

They require approval from Parliament and I don't have 272 in the Lok Sabha and 125 in the Rajya Sabha.

So, we will have to carry on with others who will support these bills and I am trying to do that.

. . .

You actually opened the Indian capital market to much more foreign investment. The debt market also you have opened for international markets. When you see the overall level of current account deficit, is this a good way of financing the deficit and what does it mean for mutual funds and capital markets?

This is an area of concern for financing the current account deficit.

The current account deficit should be around 2.5 per cent of gross domestic product.

But it is higher than that.

For that, I have to enhance the rate of savings and I should have steady flow of foreign direct investment, not foreign institutional investment alone.

It's not only the amount of current account deficit but also how to finance that amount which is an area of concern.

. . .

The big problems the government is facing are prices, corruption. . . Give us one concrete thing that, yes, this government will confirm that the government is dead serious about tackling black money and corruption.

Look at what we have done.

When the allegation about allocation of the 2G spectrum came, the first FIR was filed by the CBI in October 2009.
CBI is looking into it from that date.

As soon as the Commonwealth Games were over, the prime minister himself announced it.

It does not say that the government is not sensitive to the issue and is not responding. I am dead serious about it tackling the issue of black money and corruption.

. . .